Distinctive features of the automobile market of USA

Despite the fact that the railway system is poorly developed on the USterritory, there are a lot of excellent quality roads that can be easily compared with well-known highways in Germany. Therefore the main type of vehicles used by inhabitants of USAis personal motor transport, what makes American automobile market the most saturated, rich and diverse in the world.

The public transport, especially if to take in consideration not big, middle-sized cities, is developed worse, than in Europe, for example. Nevertheless, trips on the personal car all over country are very common in the US.

As one the main distinctive features of car’s sale-and-purchase process in USAshould be noted the fact, that there is no VAT (proceeding from that, in case of a car purchase from the legal entity, the VAT is not returned).

At the same time, when the car purchase is made, the buyer pays a tax of 5-10% (the size of this tax depends on the state, and also on the brand of the car. For example, for hybrid and diesel engine cars the tax is less). This type of taxes doesn’t pay those, who resell cars. Those buyers who purchase cars intended for export don’t pay this tax as well.

Another distinctive feature of the automobile market in the USis that almost all cars are bought on credit (loan) or leasing. And there are very few cars for which the overall cost was paid at once.

Reference:

Credit – is granting by bank or credit organization particular sum with requirement of return of the sum, including interest (percent).

Leasing – is long-term rent, when the lessor acquires the property specified by the lessee, and then leases this property to him.

The credit market is very well developed in the US. As for cars, the credit for it can be obtained both at the bank and at the seller. More often the second listed option is easier and more convenient for the buyer. And plus, for the seller it is twice advantageous: selling the car and getting percent of the credit (loan).

The lease or long-term rent is very popular in USA. For example, a leasing company has an opportunity to wholesale new BMW cars. And there is a customer that can’t buy a car due to some reasons, but who wants to use it. In this case the leasing company establishes the annual price for car’s operation – $15 000, for example, thus having assumed obligations for any car service, for full insurance, transportation in case of any malfunctions or damage. So at the same time, the customer gets a new car for use for a lower payment per year than if he used credit. Customer’s duties and responsibilities include careful usage of the car, strict observance of traffic regulations, regular visits to the service centers, etc.

At the signing of the lease contract the accurate restrictions on the maximum mileage per a month/year are set, and in case of violation of the restrictions customer is obligated to pay for  excessive mileage. Besides that the customer is obligated to pay penalties for any car damages, if that’s not the case of insurance.

On the contract expiration, the customer is offered to prolong it for the smaller sum – $10 000, for example. If the costumer refuses, this car is given for lease to another costumer.

Initially, the customer can choose contract terms – 1 year to 3 years. Usually, after three years’ operation the car is sent for sale to an auction.

Summing up, the cars which were in operation on lease conditions can be purchased for a very good price and in excellent state, as during its operation all services and maintenance were made on time, as well with careful operation overall which was guaranteed by the lease contract.